This article highlights the key proposals regarding Leasehold Reform, from King Charles speech on 7 November 2023.
This Bill is intended to ban leaseholds for new houses, but not for new flats across the UK. It will look to increase the standard lease extension period from 90 to 990 years, which will provide welcome relief to the market. Additionally, the Bill is intended to make it easier for leaseholders to purchase their freehold and fight excessive service charges through making the process cheaper and easier.
Secretary (Levelling Up) Michael Gove intends to introduce the following reforms:
These reforms are to build on the current Leasehold Reform (Ground Rents) Act 2022, which put an end to ground rents for new, qualifying long residential leasehold properties. The King proposed that the Bill would tackle the “exploitation of millions of homeowners through punitive service charges”.
The UK Government has recently confirmed a pledge by five sector-leading insurance brokers, which could benefit “thousands of leaseholders in buildings with identified fire safety issues” by materially reducing their insurance premiums. In addition, the brokers are promising a cap of 15% on the proportion of the premium that they take to compensate for their work in arranging the insurance.
The Financial Conduct Authority’s (FCA) report on broker remuneration found that brokers take as much as 60% of the cost of the premium paid by leaseholders. The FCA’s report has “strengthened the Government’s resolve to see a ban on the practice of sharing commissions. The pledge by leading insurance brokers is crucial to ensuring this policy is successfully implemented.
The Renter’s Reform Bill was carried over to the next Parliament. Here, the King highlighted that this Bill would benefit renters as it will provide “stronger security of tenure and better value”.
However, the proposal to abolish to no fault evictions is potentially delayed until “stronger possession grounds and a new court process is in place”. The Renters (Reform) Bill was first introduced to Parliament in May, earlier this year. However, the Bill is not expected to receive Royal Assent until next year.
Ashfords regularly advises social housing clients on freehold and leasehold matters. For further information on the forthcoming changes, please contact the social housing team.